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30 May 2024

Grasping Unique and Hard-to-Value Assets | Insights from FIRMA’s Fiduciary Risk Management Conference

The Fiduciary & Investment Risk Management Association recently hosted its 37th annual Fiduciary Risk Management Conference. Catering to risk compliance officers at banks and trust companies chartered by a state or federal government, this conference focused on current trends in the industry, new products and specialized lines of business, and provided insights to the management and control of associated risks.

During the conference, the Fundamentals for Getting Your Arms Around Unique and Hard-to-Value Assets session stood out as it directly impacts the work of the Unique Assets teams at SS&C Innovest, including the Oil and Gas Management team. The panel discussed the fundamental elements that bank and trust officer need to manage assets not typically held by trusts, referred to as a Unique and Hard-to-Value Assets (“UHVA”), which include:

  • Interests in real estate
  • Closely held businesses
  • Minerals (including oil and gas)
  • Commercial paper
  • Life insurance
  • Tangible assets (such as antiques/collectibles)

Managing unique assets falls outside traditional equity and fixed-income strategies, firms must ensure that personnel are qualified to manage these assets. A trustee has four distinct risks when handling UHVAs: operational risk, compliance risk, strategic risk, and reputational risk. A unique asset oil and gas management team can take the burden off the trustee by managing these distinct risk categories on its client's behalf, including: 

  • Operational Risk: A team helps throughout the asset’s life by determining whether you should accept an asset by performing a pre-acceptance review. The team then assists in retitling the assets out of the settlor/grantor and into the trust. Throughout the year, they will ensure timely and complete revenue payments and manage the asset’s day-to-day needs. When the trust terminates, that team assists in distributing the asset to the beneficiary.
  • Compliance Risk: A team can perform the OCC Regulation 9 Review on your behalf. They can track the asset’s performance throughout the year in the framework of the year-end review so you can review it in a timely and accurate manner. As your internal or external audits commence and progress, they support you in answering the auditor’s questions and concerns.
  • Strategic Risk: A unique asset team can navigate complicated real estate sales, repairs, and maintenance, insurance claims, negotiation of oil and gas leases, title validation, and all operational responsibilities for every unique asset class.
  • Reputational Risk: Reputational risk refers to actions and circumstances that can cause an organization to lose credibility with stakeholders, customers, partners, or the public. When a trust chooses to use a corporate fiduciary, they expect the highest level of service, and they expect the trustee to only work with the most professional service providers. Using a unique asset team to manage UHVAs helps the trustee maintain the trust and confidence of the trusts under their management.

Leveraging over 30 years of experience managing these asset classes, SS&C Innovest developed a comprehensive management and operations manual and a proprietary Unique Asset management and accounting system. Our team understands the necessity of maintaining a good standing between you and your clients. It is imperative to us that the goodwill you generate with your clients remains unchanged.

SS&C Innovest provides customized outsourcing solutions and Managed Services. Scores of organizations and individuals across the country, from family offices to community banks to national organizations, empower SS&C Innovest to manage these services directly or on behalf of their clients. To learn more about how SS&C Innovest can support your needs, call (800) 727-0605 or email